3rd Building Block of a Continuous Improvement Culture | Operational Excellence Quick Hits

Speaker 1: (00:05)
In the last session we talked about the second building block of the continuous improvement culture pillar. In that building block, we focused on making improvements to the organization by tying them to the KPIs. This session’s going to be about systematic capacity expansion. So in this building block, the third building block of the continuous improvement culture pillar. At this point, we’ve expanded all our capabilities in terms of cross training our workforce, creating that flexibility to be able to flex the workforce to different areas based on sales mix. And then also squeezing out everything we can from the system by doing focused improvement initiatives. So at this point we haven’t invested any capital expense. We’ve just leveraged the resources that we have to gain more capacity. At some point, you’re going to run out of opportunities to expose hidden capacity. Then we need to focus on systematic capacity expansion.

Speaker 1: (01:21)
So in this building block, we need to be out in front of our sales demand, understanding where we need capacity and when we’re going to need capacity. We need to understand what is the estimated time to need. In order to invest in new capacity, it takes a lead time. So we need to for buying new equipment, for example, or we’re going to hire people. It takes time to train those people and bring them up to speed. Also, if we’re going to invest in equipment, it takes time to procure that equipment. So we need to understand what are the lead times for the different elements that we need to invest in either resources or equipment. If we understand the lead time to bring on that capacity, then at some point we pull the trigger to add that capacity before we run out of capacity. So we don’t want to hit the wall and then decide we need to invest in capacity.

Speaker 1: (02:25)
We’ve got to make those decisions much earlier in the process, do all the necessary actions to prepare for capacity expansion, and then based on our estimated time to need given the lead time to procure that capacity, we pull the trigger and start the process of capacity expansion before it’s needed. So that way we can be on that continuous growth curve of continuously improving the systems capacity while remaining stable and capable. So this pillar continuous improvement culture is a key element of operational excellence. In order to maintain that stable and capable delivery system is extremely difficult, but to maintain that while a company is growing is much, much more difficult.

Speaker 1: (03:19)
So we’ve tried to outline the different steps here to establish that continuous improvement culture. First, creating that workforce capability and flexibility to be able to flex the workforce based on capacity needs. Second is to do focus improvement initiatives, where we’re doing targeted events that we tied to the KPIs, the organization, and squeezing everything we can out of the system before we make an investment. And then third, making those investments in targeted areas, understanding the estimated time to need and expanding that capacity before we run out of capacity. So we can continue to be on that growth curve. In the next sections, we’ll talk about the management systems that need to be in place in order to support operational excellence.